The Latin American way

Washington, United States. – Is taking place in this city a Forum for Emerging Markets.This forum will review the projections and the global economic situation and in particular the emerging markets worldwide.

The global news is not good, the world economy will takes a long way from crisis to crisis, so it is up to emerging markets, after 10 years of exceptional growth, they experiment a downturn, as a natural consequence of the global problem.

Regarding the situation in Latin America, the region in the future will grow only 2.8 percent, this has been produce by reasons like the fact that exports to developed markets have declined significantly.

This situation would require that the countries of Latin America, will try to deal with the current economic situation with two specific strategies , the first is to develop their domestic markets as a growth option , and the second would increase investment between the same countries in the region, and making that the local businesses invest in their own countries .

Unfortunately, these economic recipes do not work in the region, first because unfortunately, this recipes depends one from the other, while employers in the region to invest in their own countries, it will be very difficult to generate the activation of the internal market with respect to investment in other countries, it may be little more than an investment in their own countries, but in the region suffer from a cultural problem in this regard.

First is the cultural factor and historical disputes between countries, but the problem that is considered to affect the culture of business in Latin America is that they have a culture of protectionism and a low risk, basically a corporate culture renter where the first thought is that the reinvestment of the profits are invested in real estate, where they can ensure goodwill and receive secure income & more profits.

Another factor that affects this culture is the fact that our region, entrepreneurs if they think investment in certain sectors, is most preferred market franchises than to invent or develop innovation, if we look at what we produce regional, are truly few industries or risk products, few examples and only comes to my mind as the case of Embraer in Brazil.

Part of the culture that holds us in short economic development is another perverse dumbbell, the first factor  is the idea of not paying taxes and the second is the fact of having deep cultures of monopoly, the first leads to care for the internal market , we canceled all risks of innovation, the latter undertakes to maintain the first and try to close the competition and markets in order to remain the only and there is no risk of competition, or if it necessary that this be controlled or created by the same business groups.

One of the most serious problems in emerging markets is the fact that in general is very necessary structural reforms as a constant fact in all countries, and all these reforms that aimed to break the laws that have been created to maintain the culture of control, care of domestic industries, which in generally are finally a monopoly.

Seeing this scene, I remembered the comment of a Japanese businessman, many years ago when I worked at the bank, we organized missions of foreign investment to develop the market for maquiladoras, the Japanese mission back to see companies in the north of the country, when asked entrepreneurs which was the opinion of entrepreneurs and companies visited, one of the largest employers said , I do not understand Mexican businessmen, companies present us as the best existing business, but we never respond, if you are so wonderful that business , what is the reason for selling ? , I think these sums up the mentality in general of some employers in the region.

Political Analyst

Mail: marco.herrera @ grupopublic.com

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